E Economics

15-Year Mortgage Rate Hit A Record Low As Housing Prices Rose Most In Decades

31 July, 2021

The 15-Year mortgage rate retraced again this week and reached a new record low. The move kept boosting housing prices, which already rose most in decades.

15-Year Mortgage Rate Hit Another Record Low

According to Freddie Mac, the 15-year fixed-rate mortgage (FRM) averaged 2.10 percent for the week ending July 29, 2021 (the lowest on record). It was down from the previous week when it averaged 2.12 percent. A year ago at this time, the 15-year FRM averaged 2.51 percent.

Over the same period, Freddie Mac report showed the 30-year fixed-rate mortgage rebounded slightly, but remained close to the record low of 2.65 percent. It averaged 2.80 percent, up from 2.78 percent last week. A year ago at this time, the 30-year FRM averaged 2.99 percent.

Low Mortgage Rates Will Keep Supporting Prices Which Already Rose Most In Decades

Associated with a shortage of inventory, low mortgage rates are boosting home prices. Data releases earlier this week showed the S&P CoreLogic Case-Shiller index of national property values climbed 16.61 percent YoY in May (up from 14.84 percent in April), the biggest gain in data going back to 1988.

In the meantime, the FHFA (Federal Housing Finance Agency) purchase-only price index rose 18 percent YoY in May (the largest increase on record and up from 15.7 percent YoY percent in April).

The trend is likely to remain robust in June.  “Home value appreciation broke annual records for the second month in a row, growing 15% year-over-year in June – the highest in Zillow data reaching back through 1996.

In addition, Rick Palacios Jr. (Director of Research at John Burns Real Estate Consulting) also posted a chart on Twitter showing that Home Value Index accelerated on a YoY basis in June (but the pace of growth appears to be moderating compared to prior months).